• Michael Wright

Do you know your numbers

In accounting, a standard chart of accounts is a numbered list of the accounts that comprise a company’s general ledger. Furthermore, the company chart of accounts is basically a filing system for categorizing all of a company’s accounts as well as classifying all transactions according to the accounts they affect.

When setting up a chart of accounts it is important to know HOW to set one up. Many of the accounting software programs have a built-in chart of accounts, some of them give you the option of assigning numbers to the accounts, while others make you assign them. As a general rule here is the structure of the accounts should include the following

1000 series are asset accounts (bank accounts, inventory Accounts receivable)

2000 are Liabilities (accounts payable, Loans, Credit Cards Etc.)

3000 are equity accounts

4000 are revenue accounts

5000 are typically cost of goods (this can differ from organization to organizations, especially nonprofit orgs that do not have cost of goods)

6000 -7000 are usually reserved for operation and administration expense

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